UK accuses Argentina of commercial bullying over Falklands drilling

Argentine Falklands War veterans Hugo Romero (R) and Walter Sarverry walk next to a "Welcome to the Falkland Islands" sign in Port Stanley, in this picture taken March 14, 2012. REUTERS/Marcos Brindicci

LONDON (Reuters) - Britain on Monday accused Argentina of "bullying tactics" over what it said were baseless attempts by Buenos Aires to outlaw oil and gas drilling in the waters around the Falkland Islands, a disputed British Overseas Territory.

The accusation is the latest in a long-running feud over the sovereignty of the islands which, just over three decades after a failed Argentine invasion, has intensified as London-listed firms look to tap oil and gas deposits there.

Last month, Argentina introduced a law that would impose criminal sanctions for what it called "illegal exploration" of hydrocarbons in the Argentine continental shelf, including 15-year jail sentences and large fines.

The Falkland Islands lie within the continental shelf.

"This is a baseless gesture intended to deter legitimate commercial activity," the British Foreign Office said in a statement, adding that Britain had formally protested to Buenos Aires.

"It is shameful that Argentina is once again adopting bullying tactics in an attempt to strangle the Falkland Islands economy."

Britain said firms seeking to tap oil and gas reserves around the islands, which are about 300 miles off the Argentine coast, were governed by Falkland Islands legislation, in accordance with U.N. rules.

A spokesman at the Argentine embassy in London was not immediately available for comment.

The islands are designated a British Overseas territory, meaning they are self-governing but fall under British rule. Argentina lays claim to the islands - known as the Malvinas in Spanish - and has urged Britain to open talks on their sovereignty.

Britain has refused, pointing to the fact that 99.8 percent of the islanders voted to remain under British rule in a referendum earlier this year.

(Reporting by William James; Editing by Andrew Osborn and Pravin Char)